Major International Business Headlines Brief::: 12 September 2020

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Major International Business Headlines Brief::: 12 September 2020

 


 

 


 <http://www.zb.co.zw/> 

 


 

 


 

 

ü  US budget deficit soars to $3tn record

ü  Ex-Google boss Eric Schmidt: US 'dropped the ball' on innovation

ü  UK signs first major post-Brexit trade deal with Japan

ü  UK economy continues recovery in July

ü  Lululemon lampooned for 'resist capitalism' post

ü  Brexit: Back me over the bill, Johnson tells Tory MPs

ü  Facebook seeks fresh legal delay to block order to suspend its
transatlantic data transfers

ü  Nasdaq closes lower to end its worst week since March as tech continues
to struggle

ü  South Africa's Aspen to seek acquisitions in emerging markets

ü  S.Africa's central bank to pause cutting on Sept.17, trim in Nov

ü  Kenyan economy to grow at under 2.5% this year -finance minister

ü  S.African bank profits seen taking years to recover from COVID-19 hit

ü  Nigerian President Buhari directs central bank to stop issuing foreign
exchange for food imports

ü  Sudan declares state of economic emergency due to fall of currency

ü  Malawi's economy to grow 4.5% in 2021: finance minister

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 


US budget deficit soars to $3tn record

The US budget deficit has hit a record high of more than $3tn (£2.3tn),
driven by the government's massive spending on coronavirus relief.

 

The federal government spent more than $6tn in the first 11 months of its
financial year, including $2tn on coronavirus programmes, the Treasury
Department said.

 

The figure outpaces the $3tn it took in from taxes.

 

The shortfall is more than double the previous full-year record, set in
2009.

 

At the time, Washington was grappling with the aftermath of the 2008 housing
financial crisis.

 

Even before the pandemic, the US was on track to run a deficit of more than
$1tn this year - large by historic standards.

 

But the spending approved to try to cushion the financial impact of the
virus has exploded those projections.

 

The Congressional Budget Office this month predicted that the US was likely
to run a full-year deficit of $3.3tn, more than triple the shortfall
recorded last year. The federal government's financial year ends in
September.

 

The agency said it expected total US debt to exceed $26tn.

 

'Unsustainable'

At a hearing in Washington in June, Jerome Powell, the head of the US
central bank, told members of Congress that America's spending path was
"unsustainable", but said reducing the shortfall should not be a priority
given the state of the economy.

 

The economy shrank at an annual rate of more than 30% in the April-June
period, its worst quarterly contraction on record. Data suggest job layoffs
and business closures are continuing.

 

Roughly 30 million people - about 20% of the American workforce - remain on
some form of unemployment benefits, despite reopening underway, the Labour
Department said this week.

 

Many conservatives in Washington, however, remain leery of further spending.

 

Republicans this week put forward a $300bn proposal for more aid. The plan
failed to advance, with Democrats saying it fell far short of the more than
$3tn in relief they support.--bbc

 

 

 

 

Ex-Google boss Eric Schmidt: US 'dropped the ball' on innovation

In the battle for tech supremacy between the US and China, America has
"dropped the ball" in funding for basic research, according to former Google
chief executive Eric Schmidt.

 

And that's one of the key reasons why China has been able to catch up.

 

Dr Schmidt, who is currently the Chair of the US Department of Defense's
innovation board, said he thinks the US is still ahead of China in tech
innovation, for now.

 

But that the gap is narrowing fast.

 

"There's a real focus in China around invention and new AI techniques," he
told the BBC's Talking Business Asia programme. "In the race for publishing
papers China has now caught up."

 

China displaced the US as the world's top research publisher in science and
engineering in 2018, according to data from the World Economic Forum.

 

That's significant because it shows how much China is focusing on research
and development in comparison to the US.

 

For example, Chinese telecoms infrastructure giant Huawei spends as much as
$20bn (£15.6bn) on research and development - one of the highest budgets in
the world.

 

This R&D is helping Chinese tech firms get ahead in key areas like
artificial intelligence and 5G.

 

Dr Schmidt blames the narrowing of the innovation gap between the US and
China on the lack of funding in the US.

 

"For my whole life, the US has been the unquestioned leader of R&D," the
former Google boss said. "Funding was the equivalent of 2% or so of GDP of
the country. Recently R&D has fallen to a lower percentage number than was
there before Sputnik."

 

According to Information Technology and Innovation Foundation, a US lobby
group for technology, the US government now invests less in R&D compared to
the size of the economy than it has in more than 60 years.

 

This has resulted in "stagnant productivity growth, lagging competitiveness
and reduced innovation".

 

Dr Schmidt also said the US's tech supremacy has been built on the back of
the international talent that's been allowed to work and study in the US -
and warns the US risks falling further behind if this kind of talent isn't
allowed into the country.

 

Tech war

"This high skills immigration is crucial to American competitiveness, global
competitiveness, building these new companies and so forth," he said.
"America does not have enough people with those skills."

 

The US has been embroiled in a tech cold war with China and in recent months
has stepped up its anti-China rhetoric.

 

This week it revoked the visas of 1,000 Chinese students it claims have
military links and accused Chinese tech firms of acting as agents for the
Chinese Communist Party - claims Beijing and these companies reject.

 

The Trump administration has also taken steps to block Chinese tech firms
like Huawei and Chinese apps including TikTok and WeChat, saying they pose
threats to national security.

 

Beijing has said this is "naked bullying", and Dr Schmidt says the bans will
mean China will be even more likely to invest in its own domestic
manufacturing.

 

Dr Schmidt says the right strategy for a US-China relationship is what is
called a 'rivalry partnership' where the US needs to be able to "collaborate
with China, while also competing with them".

 

"When we're rivals, we are rough, we are pursuing things. We're competing
hard, we're trying to get advantage - real competition - which the US can do
well, and which China can do well. But there's also plenty of areas where we
need to be partners."--bbc

 

 

 

 

UK signs first major post-Brexit trade deal with Japan

The UK has struck its first major post-Brexit trade pact after signing a
deal with Japan that aims to boost trade between the countries by about
£15bn.

 

International Trade Secretary Liz Truss said it was a "historic moment".

 

She said it would bring "new wins" for British businesses in manufacturing,
food and drink, and tech industries.

 

Critics said while the deal may be of symbolic importance it would boost UK
GDP by only 0.07%, a fraction of the trade that could be lost with the EU.

 

Friday's deal still needs approval by Japan's parliament, which the
country's Foreign Minister Toshimitsu Motegi forecast would be passed by
January.

 

How many trade deals has the UK done?

Ms Truss said the UK-Japan Comprehensive Economic Partnership Agreement
means 99% of exports to Japan will be tariff-free.

 

"The agreement we have negotiated - in record time and in challenging
circumstances - goes far beyond the existing EU deal, as it secures new wins
for British businesses in our great manufacturing, food and drink, and tech
industries," she said.

 

"From our automotive workers in Wales to our shoemakers in the North of
England, this deal will help build back better as we create new
opportunities for people throughout the whole of the UK and help level up
our country."

 

She added that, strategically, the deal was an important step towards
joining the Trans-Pacific Partnership and placing Britain at the centre of a
network of free trade agreements.

 

Major Japanese investors in the UK such as Nissan and Hitachi would benefit
from reduced tariffs on parts coming from Japan and streamlined regulatory
procedures, the UK's trade department statement said.

 

Prime Minister Boris Johnson has said Brexit gives Britain the freedom to
strike trade deals with other countries around the world.

 

Business leaders welcomed the agreement, but stressed that securing a deal
with the EU remained the most important goal.

 

The director general of the British Chambers of Commerce, Adam Marshall,
called the announcement a milestone, but added: "Whilst this agreement is
undoubtedly cause for celebration, securing a Free Trade Agreement with the
EU remains critical to the future of businesses in the UK.

 

"We urge ministers to redouble their efforts to reach a comprehensive
partnership with our largest trading partner at a crucial time in the
negotiations."

 

The CBI also hailed the agreement, with director general Carolyn Fairbairn
saying this "breakthrough moment" can be the first of many.

 

"It's a huge opportunity to secure new Japanese investment across a wider
range of sectors and UK regions," she said.

 

A small step

You can almost hear the sighs of relief echoing around Westminster and
within the business community.

 

After weeks of wrangling, the first deal of the Brexit era has been struck,
which ensures that 99% of British goods can enter Japan without tariffs, or
extra charges.

 

But ultimately, this deal largely mirrors the agreement which already exists
between the EU and Japan. And with trade with Japan accounting for just 2%
of the UK's total, the expected boost to GDP of 0.07% over the long term is
a tiny fraction of what might be lost from leaving the EU.

 

And there is good reason for Japan cooperating to ensure this deal was
secured in record time. It stands to get the lions share, 80%, of the total
estimated £15bn boost to trade for both countries.

 

Even then, the talks haven't been as speedy or straightforward as initially
hoped - which may not bode well for negotiations elsewhere.

 

About 99% of exports between the two nations will be tariff-free under the
deal, with a particular focus on the food and drink, finance and tech
sectors.

 

Manufacturing parts coming from Japan will benefit from reduced tariffs, as
will British pork, beef and salmon travelling in the opposite direction.

 

Japan's Foreign Minister Toshimitsu Motegi said: "It was a very tough
negotiation, but we reached the agreement in principle in about three
months, at an unusually fast pace.

 

"While maintaining the high levels of access to the British market under the
Japan-EU EPA, we improved our access to the British market on train cars and
some auto parts."

 

--bbc

 

 

 

UK economy continues recovery in July

The UK economy grew by 6.6% in July, according to official figures, but
remains far below pre-pandemic levels.

 

It is the third month in a row that the economy has expanded.

 

But the Office for National Statistics (ONS) said that the UK "has still
only recovered just over half of the lost output caused by the coronavirus".

 

Hairdressers, pubs and restaurants contributed to growth after companies
were allowed to reopen in July.

 

Is the UK economy back to pre-coronavirus levels?

Definitely not. The UK's economy - which is measured by the value and the
volume of goods and services it produces - is still 11.7% smaller than it
was in February, before lockdown was imposed.

 

Growth in July was also slower than the 8.7% expansion seen in June.

 

There are encouraging signs, however. Thomas Pugh, UK economist at Capital
Economics, said the reopening of restaurants and pubs meant the
accommodation and food services sector "rose by a whopping 140.8%" between
June and July.

 

This had a knock-on effect for the alcohol industry which grew by 32.7%.

 

Keeping youngsters occupied while at home also continued to boost demand for
toys and games, said the ONS, while holidaying in the UK supported
campsites, cottages and caravan parks "because of a large increase in
staycations".

 

However, activity in the accommodation and food services sector was still
60.1% below the level recorded in February.

 

And while Mr Pugh expects the Eat Out to Help Out scheme to provide a
further boost in August, "now that most sectors in the economy are open
again there is little scope for further large rises in monthly GDP".

 

Meanwhile, the car sector saw demand return to pre-pandemic levels.

 

"Car sales exceeded pre-crisis levels for the first time with showrooms
having a particularly busy time," said Darren Morgan, director of economic
statistics at the ONS.

 

Up, up, but not away. The UK economy continued a sharp recovery from
lockdown in July, growing by a bumper 6.6% in the month. But the rate of
recovery was a little slower than in June, raising some concerns about the
ongoing strength of the bounce back.

 

The economy is still nearly 12% smaller than before the pandemic crisis, and
has recovered just over half of the lost output during the shutdowns.

 

While the third quarter is on course to see a record number for growth and
the official end of recession, fears remain that the recovery could peter
out.

 

Business groups continue to push for extensions to government support
packages that are due to close. The figures in July reflected the partial
reopening of retail, manufacturing, and some public sector activities such
as schools.

 

How long will recovery take?

Forecasts vary but the consensus is it won't be swift.

 

The UK fell into recession after activity shrank for the first and second
quarters of this year after the government announced a lockdown to stop the
spread of the coronavirus.

 

And in the three months to July, the economy shrank by 7.6%.

 

Mr Pugh questioned how strong the UK's recovery would be throughout the rest
of the year.

 

"Talk of tax rises at the next Budget, a further deterioration in the Brexit
negotiations and a worrying rise in the number of virus cases and tighter
social distancing restrictions will all conspire to slow the recovery even
further," he said.

 

Dean Turner, economist at UBS Global Wealth Management, predicts that it
will take until the end of 2021 before the UK recovers to pre-pandemic
levels.

 

"Even with a managed exit from the Brexit transition agreement, it is
unlikely that the lost output would be recovered before the end of next
year," he said.

 

"The latest twist in negotiations raises the prospect that any recovery may
take longer."

 

What risks lie ahead?

The number of coronavirus cases in the UK have begun rising again and social
gatherings of more than six people will be illegal in England from Monday.

 

"The recovery likely will stall if, as looks likely, new Covid-19 infections
continue to rise, keeping people working from home and avoiding consuming
services that require close human contact," said Samuel Tombs chief UK
economist, Pantheon Macroeconomics.

 

"Accordingly, we continue to expect GDP to be about 5% below its peak at the
end of this year."

 

Meanwhile, the Coronavirus Job Retention Scheme is due to end on 31 October.

 

Chancellor Rishi Sunak has been emphatic that it will not continue. However,
the Resolution Foundation think tank said he "needs to reconsider his plans
to swiftly phase out support given that the economic crisis will be with us
for some time to come".

 

Former prime minister and chancellor Gordon Brown, warned that ending the
furlough scheme was a "cliff-edge" that could trigger "a tsunami of
unemployment".

 

"The government's got to change course here," he told the BBC's Today
programme.--bbc

 

 

 

Lululemon lampooned for 'resist capitalism' post

Lululemon, known for its £128 yoga leggings, is facing mockery on social
media for promoting an event about "decolonising gender" and how to "resist
capitalism".

 

The event was featured in an Instagram post in which Lululemon recommended
other accounts to follow, including the host of the workshop, Rebby Kern.

 

The yoga instructor is a US-based brand ambassador for the firm.

 

Lululemon distanced itself after the irony of the message drew attention.

 

"We recently shared on our social channels an upcoming event organised by
one of our ambassadors.

 

"This is not a Lululemon forum and it does not represent the company's
views," a spokeswoman told the BBC.

 

She said the firm was removing the post.

 

Lululemon shares have rallied more than 35% this year after signs the
pandemic has reignited demand for so-called athleisure-wear.

 

But the ridicule gained legs on social media after the conservative Woke
Capital Twitter account, which frequently lampoons corporate marketing
efforts, spotlighted the seemingly awkward pose from the company, which is
worth more than $40bn.

 

Other conservative pundits and journalists soon chimed in.

 

Amy Swearer, a legal fellow at the Heritage Foundation think tank, noted:
"Lululemon IS capitalism. It is literally a privately owned corporation that
raked in half a billion dollars in pure profits last year, merely by selling
overpriced yoga pants to women willing and able to pay for this luxury".

 

Lululemon, which turned skin-tight black leggings into a fashion statement,
has weathered controversy before.

 

In 2019 the company investigated claims that workers at a factory in
Bangladesh making its clothing had been beaten and abused, according to the
Guardian.

 

Earlier this year, it also apologised after one of its employees posted a
T-shirt design on social media that caused outrage in China.

 

The firm said the design, of a takeaway food carton with "bat wings", was
seen as a racist reference to coronavirus, was not one of its products and
the employee had been dismissed.--bbc

 

 

 

Brexit: Back me over the bill, Johnson tells Tory MPs

Boris Johnson has urged Conservative MPs to back his plan to override part
of the Brexit withdrawal agreement.

 

In a Zoom call with around 250 of them, he said the party must not return to
"miserable squabbling" over Europe.

 

The EU has warned the UK it could face legal action if it does not ditch
controversial elements of the Internal Market Bill by the end of the month.

 

And a Tory MP has proposed an amendment to the bill, which would affect
trade between Britain and Northern Ireland.

 

Meanwhile, the European Parliament has threatened to scupper any UK-EU trade
deal if the bill becomes UK law.

 

The two sides have less than five weeks to agree a deal before Mr Johnson's
15 October deadline - after which he says he is prepared to "walk away".

 

Informal talks are due to resume on Monday, with the next official round of
talks - the ninth since March - starting in Brussels on 28 September.

 

The Internal Market Bill, which will be formally debated in the House of
Commons for the first time on Monday, addresses the Northern Ireland
Protocol - the part of the Brexit withdrawal agreement designed to prevent a
hard border returning to the island of Ireland.

 

If it became law it would give UK ministers powers to modify or "disapply"
rules relating to the movement of goods between Britain and Northern Ireland
that will come into force from 1 January, if the UK and EU are unable to
strike a trade deal.

 

The EU says the planned changes must be scrapped or they risk jeopardising
the UK-EU trade talks.

 

But the government has rejected this demand, arguing the measures in the
bill are needed to protect the integrity of the UK and the peace process in
Northern Ireland.

 

In his Zoom call with MPs on Friday, the prime minister did not take
questions and a poor signal meant the video and audio connections were lost
for several minutes.

 

He called for "overwhelming support" for the bill, describing it as
"absolutely vital" to "prevent a foreign or international body from having
the power to break up our country".

 

Mr Johnson added that he would not countenance "the threat of a border down
the Irish Sea".

 

But he said there was still a "very good chance" of the UK and EU striking a
deal by mid-October similar to that previously agreed between the EU and
Canada - which got rid of most, but not all, tariffs on goods.

 

BBC chief political correspondent Vicki Young said Tory MPs were "looking
for a sign of compromise" from Mr Johnson, as they "simply can't believe the
government is prepared to break international law", but the prime minister
"dug his heels in".

 

'A harmful act'

In a column in the Daily Telegraph, Mr Johnson accused the EU of
reinterpreting the Withdrawal Agreement to "destroy the economic and
territorial integrity of the UK" and "endanger peace and stability in
Northern Ireland".

 

"I have to say that we never seriously believed that the EU would be willing
to use a treaty, negotiated in good faith, to blockade one part of the UK,
to cut it off," he said.

 

Conservative backbencher Sir Bob Neill, who chairs the Commons Justice
Committee, said he was not reassured by the prime minister's Zoom call.

 

He is tabling an amendment to the bill to try to force a separate
parliamentary vote on any changes to the Withdrawal Agreement.

 

"I believe it is potentially a harmful act for this country, it would damage
our reputation and I think it will make it harder to strike trade deals
going forward," he said.

 

At around the same time as the prime minister was speaking, the European
Parliament announced it would "under no circumstances ratify" any trade deal
reached between the UK and EU if the "UK authorities breach or threaten to
breach" the withdrawal agreement.

 

Northern Ireland Secretary Brandon Lewis has admitted parts of the bill,
which would go against a treaty signed by the UK and EU, would "break
international law in a very specific and limited way".

 

There is unease over this within the Conservative Party, with former leaders
Theresa May, Lord Howard and Sir John Major urging Mr Johnson to think
again.--

 

 

 

Facebook seeks fresh legal delay to block order to suspend its transatlantic
data transfers

Facebook  is firing up its lawyers to try to block EU regulators from
forcing it to suspend transatlantic data transfers in the wake of a landmark
ruling by Europe’s top court this summer.

 

The tech giant has applied to judges in Ireland to seek a judicial review of
a preliminary suspension order, it has emerged.

 

Earlier this week Facebook confirmed it had received a preliminary order
from its lead EU data regulator — Ireland’s Data Protection Commission (DPC)
— ordering it to suspend transfers.

 

That’s the logical conclusion after the so-called Schrems II ruling which
struck down a flagship EU-US data transfer arrangement on the grounds of US
surveillance overreach — simultaneously casting doubt on the legality of
alternative mechanisms for EU to US data transfers in cases where the data
controller is subject to FISA 702 (as Facebook is).

 

Today The Currency reported that Dublin commercial law firm, Mason Hayes +
Curran, filed papers with the Irish High Court yesterday, naming Ireland’s
data protection commissioners as defendant in the judicial review action.

 

Facebook confirmed the application — sending us this statement: “A lack of
safe, secure and legal international data transfers would have damaging
consequences for the European economy. We urge regulators to adopt a
pragmatic and proportionate approach until a sustainable long-term solution
can be reached.”

 

In further remarks the company did not want directly quoted it told us it
believes the preliminary order is premature as it said it expects further
regulator guidance in the wake of the Schrems II ruling.

 

It’s not clear what further guidance Facebook is hankering for, nor what
grounds it is claiming for seeking a judicial review of the DPC’s process.
We asked it about this but it declined to offer any details. However the
tech giant’s intent to (further) delay regulatory action which threats its
business interests is crystal clear.

 

The original complaint against Facebook’s transatlantic data transfers dates
all the way back to 2013.

 

Ireland’s legal system allows for ex parte applications for judicial review.
So all Facebook had to do to file an application to the High Court to
challenge the DPC’s preliminary order is a statement of grounds, a verifying
affidavit and an ex parte docket (plus any relevant court fee). Oh and it
had to be sure this paperwork was submitted on A4.

 

The DPC’s deputy commissioner, Graham Doyle, declined to comment on the
latest twist in the neverending saga.-techcrunch

 

 

 

 

Nasdaq closes lower to end its worst week since March as tech continues to
struggle

The Nasdaq Composite fell in another volatile session on Friday as the
continuing tech sell-off drove the benchmark to its worst week in months. 

 

The Nasdaq closed 0.6% lower at 10,853.55. At its session high, the
composite rose as much as 1%; it was down more than 1.7% at one point as
well. Apple dropped 1.3% and Amazon fell by 1.9%. Facebook, Alphabet and
Microsoft were all down.

 

The S&P 500 eked out a small gain after gyrating between solid gains and
steep losses. The broader-market index closed about 0.1% higher at 3,340.97.
Meanwhile, the Dow Jones Industrial Average ended the day up 131.06 points,
or 0.5%, at 27,665.64. The 30-stock average was up 294.24 points, or 1.1%,
at its session high and fell as much as 86.46 points. 

 

“Markets continue to struggle finding an equilibrium,” said Mark Hackett,
chief of investment research at Nationwide. “This market is more akin to the
emotional swings of March and April than in recent months. We are likely to
continue in a period of directionless volatility as bulls and bears wrestle
between the strong Fed liquidity and improving economic backdrop and the
continued uncertainty and elevated valuations.”

 

Tech selling briefly picked up after Bloomberg News reported, citing
sources, that SoftBank was considering changes to its options trading
strategy. Last week, SoftBank was identified as the “Nasdaq whale” that
bought billions in stock options in a bet for higher prices in Big Tech. 

 

All three of the major averages posted steep losses for the week. The Nasdaq
fell 4.1% week to date for its biggest weekly decline since March. The S&P
500 had its worst one-week performance since June, falling 2.5%. The Dow
fell 1.7% this week. 

 

“The next couple of sessions will be crucial in judging the possible extent
of the pullback, and bulls will be looking for signs of positive divergences
as the major indices approach their 50-day moving averages,” said Ken
Berman, strategist at Gorilla Trades.

 

Big Tech was also down sharply week to date. Facebook and Amazon each lost
more than 5% this week. Apple and Netflix slid 7.4% and 6.6%, respectively.
Alphabet and Microsoft were both down more than 4% week to date. Tesla,
meanwhile, plunged 10.9% this week. At the S&P 500 sector level, tech fell
4.4% week to date for its biggest one-week loss since March.

 

Wall Street was coming off a session in which the major averages closed
sharply lower after a steep downturn in tech names. Those losses came after
the benchmarks gave up solid gains. 

 

Douglas Busch, founder of ChartSmarter.com, said a “hallmark” of a healthy
market is closing near its high after a weak start. “The opposite of that
action could be the definition of how the benchmarks fared Thursday,” he
said.

 

“Decent early gains quickly faded, and as many stated last week’s lows were
critical to hold,” Busch said in a note to clients. “Perhaps, for the first
time in a while, we can say advantage bears.”

 

Consumer prices jump in August

The Labor Department said Friday its U.S. consumer price index rose by 0.4%
in August. Eonomists polled by Reuters expected an increase of 0.3%.

 

That larger-than-expected advance was driven the biggest cost increase for
used cars and trucks in more than 51 years. 

 

“The resurgence in economic demand following the pandemic lock down has
turned the direction of consumer prices on its head with pent-up purchases
from the consumer dramatically changing the deflation trend to an inflation
trend,” said Chris Rupkey, chief financial economist at MUFG. -cnbc

 

 

 

 

South Africa's Aspen to seek acquisitions in emerging markets

JOHANNESBURG (Reuters) - South African pharmaceutical major Aspen Pharmacare
Holdings Ltd said on Thursday it is planning to expand its portfolio in
emerging markets through a mix of organic growth and acquisitions, as part
of a new strategy.

 

 

“The focus of the business is to take it to a significant level in countries
where we are well established with a strong base,” Aspen’s Deputy Chief
Executive Gus Attridge told Reuters.

 

He said the company preferred exiting from developed markets where it lacked
scale.

 

Earlier this week Aspen agreed to sell the rights to its European thrombosis
business to U.S. pharmaceutical company Mylan, while retaining the business
in emerging markets.

 

Aspen Chief Executive Stephen Saad said during an investor presentation that
with the sale of the thrombosis business, the country’s biggest drugmaker
had mostly achieved its targets of reducing its portfolio and cutting its
debt.

 

“We have invested billions in our business and those returns will start
coming now,” he said, adding that the company will continue with its
strategy of not raising equity to meet capital needs.

 

Aspen, which has a 22% share of the sub-Saharan Africa drug supply market,
has two main business divisions - commercial pharmaceuticals and
manufacturing.

 

Commercial pharmaceuticals, under which the company sells injectables and
oral medicines, contributes almost 85% of group revenues.

 

Attridge said Aspen would look at acquisitions in its commercial business in
countries such as Australia, China, South Africa and territories in Latin
America.

 

Aspen’s full-year headline earnings per share rose 9% to 12.68 rand
($0.7617), boosted mainly by its manufacturing division, which saw a 30%
increase in profits.

 

Headline earnings per share or HEPS is the main profit measure for South
African companies.

 

The company warned however that the coronavirus pandemic is likely to impact
results in the year ahead, though they could benefit from a depreciated
rand.

 

($1 = 16.6473 rand)

 

 

 

 

S.Africa's central bank to pause cutting on Sept.17, trim in Nov

JOHANNESBURG (Reuters) - South Africa’s Reserve Bank will pause in easing
its repo rate next week and cut it by a quarter of a percent to 3.25% in
November to cushion a deep pandemic-driven economic contraction before
inflation resurfaces, a Reuters poll found on Friday.

 

 

Following 300 basis points of SARB cuts this year, a poll taken in the past
week showed 15 economists saw the repo rate on held on Thursday while 10
predicted a modest 25 basis point cut to 3.25%.

 

However, the survey median shows rates will be cut in November for the last
time in this cycle before the SARB begins raising rates to 3.50% in either
July or September.

 

“The SARB still has room for another rate cut worth 25 basis points, but
this will be contingent on data,” wrote Citi’s Luis Costa.

 

Costa cautioned that space for further cuts is narrow due to the structure
of government spending.

 

Stagflation -- persistent high unemployment and inflation with weak or no
economic growth -- was a problem familiar to South Africa’s citizens and
policymakers before disinflation took hold in the past two years.

 

Inflation sank to its lowest in more than 15 years in May at 2.1%, but is
back on the rise even as the economy, already weak before the coronavirus
pandemic, reels from shutdowns and weak consumer demand.

 

“We have increased our forecast for 2020 inflation to 3.6%, as the recent
jump in inflation to 3.2% indicates inflation will likely rise above 4% by
year-end. That would imply negative real rates, which are a major concern
for the central bank,” said Francesca Beausang of Continuum Economics.

 

Beausang added that given the scale of the South African recession, a rate
hike was unlikely any time soon.

 

For his part, SARB governor Lesetja Kganyago has made it clear he is not
excessively concerned about upside inflationary developments over the next
18 months as they are already built into the central bank’s forecast.

 

Inflation is expected to average 3.3% this year and quicken to 4.2% in 2021,
according to the latest Reuters poll, slightly higher than last month.
Economists attribute this to the rest of global economic activity picking up
after lockdowns end and little to do with domestic demand.

 

South Africa’s economy shrank a staggering 51% in the second quarter on a
seasonally-adjusted, annualised basis. The poll showed the economy
contracting 8.5% this year as a whole, 0.5 percentage points weaker than
last month’s median.

 

 

 

 

Kenyan economy to grow at under 2.5% this year -finance minister

NAIROBI (Reuters) - Kenya’s economy is expected to grow by less than 2.5%
this year, the finance minister said on Friday, as more evidence of the
economic damage caused by the health crisis emerges.

 

 

The projected growth rate will be a slide from 5.4% last year, Ukur Yatani
told a virtual event to launch budget making for the 2021/22 financial year,
battered by loss of jobs, a steep contraction in tourism and a drop in
government revenues.

 

“The COVID-19 pandemic is likely to cause a major economic shock,” the
minister said.

 

Thousands of workers have lost their jobs and some employees have had their
hours reduced.

 

The tourism sector, which many households rely on for their livelihoods, is
expected to contract by 18.7% this year and 9.1% next year, before it starts
to grow slightly in 2022, the Treasury said.

 

The government’s revenue from taxes dropped by 10% in the year to August, or
120 billion shillings ($1.11 billion), the finance ministry said, partly due
to tax cuts announced in April to support consumer demand in the face of
pandemic.

 

The coronavirus crisis has also upended the government’s budget deficit
reduction plans.

 

In the 2021/22 (July-June) financial year, the finance ministry said it will
target a fiscal deficit of 7.3% of GDP, slightly down from this fiscal
year’s deficit of 8.4%.

 

Pre-pandemic forecasts had put the fiscal deficit for this financial year at
4.9% of GDP, narrowing to 3.9% in 2021/22.

 

Kanini Kega, the chairman of parliament’s budget committee, warned officials
against taking the budget plans lightly, normally in the form of additional
requests for cash during a given financial year, after the budget has been
approved.

 

“The huge variations and lack of predictability has eroded the credibility
of our budget,” he said.

 

($1 = 108.4000 Kenyan shillings)

 

 

 

S.African bank profits seen taking years to recover from COVID-19 hit

JOHANNESBURG (Reuters) - Coronavirus-related bad debts have set South
African banks’ profits back by around a decade or more and they are unlikely
to recover for at least three years, two top executives told Reuters, as the
economy struggles with recession.

 

 

The country’s four biggest lenders have long battled to grow profits in a
perennially weak home economy, but any gains were wiped out within a few
months as the pandemic prompted massive charges for rising bad loans.

 

Half-year profits at Standard Bank, Africa’s largest bank by assets, plunged
to their lowest in eight years while FirstRand’s full-year headline earnings
per share - the main profit measure in South Africa - fell to a seven-year
low.

 

Nedbank’s half-year earnings plunged to 15-year lows while Absa’s were set
even further back.

 

Alan Pullinger, FirstRand CEO, told Reuters earnings would likely be
restored some time between 2023 and end-2024, though any estimates were
subject to huge uncertainty.

 

“I’m not sure it’s going to be much sooner than that, and equally I would be
disappointed if it’s much later than that,” he said.

 

The big four banks booked impairment charges worth around 58 billion rand
($3.5 billion), including actual losses on bad loans and provisions for
possible future bad debts, according to Reuters calculations.

 

“Earnings restoration is probably three to four years out if we use the
global financial crisis as a benchmark,” said the CEO of one of the other
major lenders, who did not want to be named due to uncertainty around the
health and economic outlooks.

 

GREAT UNKNOWN

Other banks declined to give estimates. None of the lenders, whose share
prices have plummeted on worries over their prospects, have publicly
provided guidance on when earnings will recover to 2019 levels.

 

Some investors, however, said the banks remained good long-term bets. While
the pandemic will deal them a more serious blow than the 2008-2009 global
financial crisis, when they got off relatively lightly, their capital levels
are high and lending growth has been relatively conservative.

 

“The first-half was a write-off ... But they went into (the crisis) in a
better position,” said Richard Cheesman, senior investment analyst at Protea
Capital Management, a banking sector investor.

 

The most serious long-term drag they face now is the ailing economy, already
in recession when the crisis hit, and which recorded its largest contraction
ever in the second quarter.

 

“The prospects for economic growth are really poor and likely to remain that
way,” said Anthony Sedgwick, co-founder of another bank investor, Abax
Investments.

 

More immediate risks to earnings remain. It’s uncertain how borrowers will
cope when debt relief measures like payment holidays end, and banks could
yet face more bad debt charges.

 

Mahin Dissanayake, head of bank ratings for sub-Saharan Africa at Fitch
Ratings, said lenders had provisioned for bad debts conservatively, but it
was difficult to predict what would happen in even the next few months given
the level of uncertainty around the economic recovery.

 

“It’s a big unknown,” he said.

 

($1 = 16.7512 rand)

 

 

 

Nigerian President Buhari directs central bank to stop issuing foreign
exchange for food imports

ABUJA (Reuters) - Nigerian President Muhammadu Buhari on Thursday directed
the central bank to stop issuing foreign exchange for food and fertiliser
imports, according to a statement issued by his spokesman.

 

 

 

Sudan declares state of economic emergency due to fall of currency

KHARTOUM (Reuters) - Sudan declared an economic state of emergency on
Thursday after its currency fell sharply in recent weeks due to “systematic
vandalism,” officials said.

 

The transitional government, in charge of the country since the ouster of
Omar al-Bashir last year, will set up special courts in the next days to
fight smuggling and other illicit activities undermining the economy,
officials told a televised news conference.

 

The pound had fluctuated drastically in recent days, prompting major food
suppliers to halt distribution of their products and pushing prices of food
up between 50% and 100% at supermarkets and retailers, a Reuters witness
said.

 

It comes at a time of record Nile River flooding that has left tens of
thousands of people homeless. The government said it had allocated more than
150 million Sudanese pounds ($2.73 million) to help flood victims, the state
news agency reported.

 

The government under Bashir had previously tried to crack down on the
black-market traders by arresting some of them, but others remained
persistent. The currency has been devalued four times since 2018.

 

Inflation in Sudan is second only to that of Venezuela, with the headline
rate climbing to 143.78% in July from 136.36% in June.

 

Security forces would also step up controls at borders and airports to stop
a smuggling of commodities such as gold, officials said.

 

 

 

Malawi's economy to grow 4.5% in 2021: finance minister

LILONGWE (Reuters) - Malawi’s economy is likely to expand by 4.5% next year,
Finance Minister Felix Lafiel Mlusu said in a budget speech on Friday.

 

Before the coronavirus pandemic struck this year, gross domestic product
(GDP) in the small southern African nation was seen expanding around 5.1% in
2020. That forecast has since been revised to a 1.9% contraction.

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
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investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


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